Week in Review – 22 April 2016

Local property news 
Private home sales jump in March
March saw a 178 per cent jump in private home sales from the previous month, the highest number in eight months. The surge in sales came as more units were launched, with 682 non-EC units for sale, up from 209 units in February. Besides new properties, there was also a rise in sales of previously launched units. 
In an interview with Today, Christine Li, Research Director at Cushman & Wakefield, noted that the rise can be attributed to two factors – repressed demand due to the lack of activity in the property market since last December, and good value propositions presented by new projects Cairnhill Nine and The Wisteria. Ong Teck Hui, National Director of Research & Consultancy at Jones Lang LaSalle told the Singapore Business Review that undecided buyers may have decided to purchase after the announcement that cooling measures will remain. 
HK developers undeterred by local cooling measures 
Executives of Hong Kong-based developer Cheung Kong Property Holdings continue to express great interest in the Singapore property market despite the government’s position that cooling measures will not be relaxed. Francis Wong, a director at Cheung Kong Real Estate, told Today that the growth of Singapore’s economy and rising income levels have resulted in better affordability. He added that the company is confident in the uptick of sales volumes and home values as the future supply drops. Government measures are not taken into consideration when Cheung Kong Property Holdings selects land to invest in and are only reflected in the bidding price. Greater risk brought about by such measures will lead to lower bid prices from the company, said Mr Justin Chiu, executive director of Cheung Kong. 

Investors say Singapore property overvalued
High-net worth and core investors between the ages of 40 and 75 are discouraged from entering the Singapore property market due to the perception that prices are inflated, according to a survey conducted by Legg Mason Global Asset Management (LMGAM). The survey was conducted among three groups of investors – high-net worth, core and millennials. Similar sentiments were also expressed among millennial investors aged between 18 and 39. The proportion of investors who perceive real estate as one of their top three investment choices fell from 41 per cent in 2015 to 29 per cent in 2016. Despite expressing greater confidence in Singapore’s economy and the global economic uncertainty, local investors are still more likely to pay attention to international investments. They are also the most risk-averse in Asia, with 78 per cent of investors over 40 and 69 per cent of millennials taking a conservative stance when investing. 

Shift in buyer preference towards shops and shophouses 
A Knight Frank report shows that mortgagee listings have seen a decrease year-on-year by 24.6 per cent, together with mortgagee sales dropping by 11.2 per cent in 2016. The report also noted growing preferences for shops and shophouses over residential properties.  Shops and shophouses put up for auction increased to 27 units in the first quarter; 14.8 per cent were sold. In contrast, the auction success rate of residential properties fell for the second consecutive quarter, to 2.4 per cent, despite 85 auction listings. According to Knight Frank, the shift in interest to shops and shophouses might be a bid to avoid the Additional Buyers’ Stamp Duty, applicable only to residential properties. 

Positive demand for new launches 
DBS says there is greater buyer demand for new property launches due to their prime locations and affordability as compared to properties in the same vicinity. New developments Sturdee Residences and Jem at Toa Payoh are expected to be well received at their launch in April and May respectively. In response to the positive sentiments expressed by buyers, DBS suggested that developers may increase supply. However, developers should be wary of a possible fall in prices caused by greater market vacancy and rising interest rates.
Global property news 

Improving US housing market despite weak sentiments among homebuilders 
US home building fell by 8.8 per cent in March as the construction of both single-family and multi-family homes decreased. The number of permits for future construction also fell by 7.7 per cent to hit a one-year low. Despite entering the spring selling season, homebuilders have not expressed great confidence in the housing market.  The March National Association of Home Builders/Wells Fargo builder sentiment index remained at 58, the same as February. 
The outlook for the housing market in the next six months remains positive, with economists surveyed by Bloomberg expecting buyer traffic to improve. Home resales rose 5.1 per cent according to the National Association of Realtors. With a supply shortage and increasing demand, houses are selling at a faster rate and inventories have tightened. 

London home demand falls 
The number of London properties sold before completion dropped by 33 per cent in the first quarter of the year, from 8,927 homes to 5,947 homes, reported Molior London. According to Fasial Durrani, Head of Research at broker Cluttons LLP, local buyers, concerned about property affordability, are being deterred by high prices. While international buyers are not as price sensitive, increased taxation and uncertain economic outlooks have stifled demand. Developers are looking towards institutional investors, offering discounts as high as 20 per cent for large purchases.